Endgame's 'Sky' high in distrib deal

December 6, 2004

Jim Stern's financing and production company Endgame Entertainment has entered the distribution biz. It is teaming with production/distribution shingle Maxmedia to co-distrib animated pic "Sky Blue," which premiered at the 2004 Sundance Film Festival.

Endgame is using its financing arm to underwrite pic's P&A for its Dec. 31 Oscar-qualifying release in L.A. and its nationwide release, which will begin in New York in mid-February.

South Korean animated pic, directed by Moon Sang Kim, is the first toon to combine 3-D, 2-D, live action and miniatures.

Film was recently released in Korea under the title "Wonderful Days," and has been dubbed and directed for an English-language audience by Sunmin Park.

Set in the postapocalyptic future, anime-style feature follows a young female soldier who must make the ultimate choice between love, duty and the hope of a better world.

" 'Sky Blue' is one of the most visually arresting films I have ever seen, and as such, this is the perfect first project for Endgame to distribute theatrically in North America," said Stern.

Endgame's recent productions include "Proof," with Miramax Films; "Five Children and It," with the Henson Co., the U.K.'s Capitol Films and the U.K. Film Council; "Compleat Female Stage Beauty," with Tribeca Pictures and Lions Gate; and "Harold & Kumar Go to White Castle," with Senator Intl. and New Line Cinema.

Rousselet rustles up 'War' coin

November 28, 2004

PARIS With American soldiers poised to go to war in Iraq, it wasn't the perfect time to be pitching a movie about an arms dealer.

Which is why Andrew Niccol's "Lord of War" was tossed around Hollywood like a hot potato until eventually landing on the desk of a Gallic film producer.

Philippe Rousselet, who had never produced an American film before, jumped at the chance to team with the "Truman Show" scribe and helmer of "Gattaca."

"With the way things are in the U.S., it isn't easy for a studio to commit to a 'Scarface' or 'Goodfellas'-style film about the world of arms dealing," says Rousselet.

"Look at the fuss there was over 'Fahrenheit 9/11.' It's a question of timing." The pic, which stars Nicolas Cage as an international arms dealer and Ethan Hawke as an Interpol agent trailing him, recently finished shooting and is now in post-production.

Film has already drawn attention due to the way Rousselet drummed up $50 million to finance it -- without the aid of a Hollywood studio.

Presales by Arclight brought in nearly $30 million, while the remainder is a combination of coin from German tax fund VIP3 via L.A. based Ascendant Pictures; bank debt via Citibank West in association with Endgame; and other equity as well as Rousselet's own money for bridging purposes.

"Things happen quickly in the U.S. Once you've successfully financed a $50 million film, it means you could do it again."

"Lord of War" hasn't got a U.S. distribution deal yet, but Rousselet thinks the arms-dealing subject matter is unique enough to interest American auds.

He and Niccol created Entertainment Manufacturing Co. to produce "Lord of War," and they are already planning Niccol's next pic, "Manhattan Brave," which they plan to shoot in New York and Canada next year. Rousselet pitches it as "a coming-of-age love story about a young man who's one-quarter native American."

Company aims to make two or three American films a year and is in talks with possible financiers to create a fund to finance 10-12 pics.

Back in Gaul, Rousselet's French company Les Films de la Suane continues to carve a niche for itself. The company has produced eight movies, ranging from James Huth's comedy "Serial Lover" to the flop actioner "Blanche" to "The Little Chinese Seamstress."

To free himself up for the American films he wants to make, Rousselet recently brought in Etienne Comar to executive produce the French slate.

There are two movies in production, the x5 million ($6.5 million) Alain Chabat starrer "Papa," helmed by Maurice Barthelemy, and "The Godfathers," a $15.6 million comedy starring Gerard Lanvin, Gerard Darmon and Jacques Villeret, helmed by Frederic Forestier.

Two more are planned for next year, "The Next Day," penned by "Podium" scribe Olivier Dazan, described by Rousselet as a French "Groundhog Day," and the $17 million "The Concert," an English-language farce starring Jonathan Pryce and Pete Postlethwaite, which will be helmed by Radu Mihaileanu.

Docu Crew Films Ohio Vote

November 3, 2004

Filmmakers James D. Stern and Adam Del Deo are in Ohio shooting the feature documentary "Ohio: An American Vote."

The duo went to Ohio eight days ago when they heard reports that Republicans were sending more than 3,000 observers to challenge voters. They quickly mobilized 11 camera crews and sprang into action.

"Ohio is the quintessential example of American democracy either gone right or gone wrong," Stern said.

The docu, with a seven-figure budget, follows individuals and the challenges they face voting, the struggle between political parties, and court rulings and appeals.

Stern and Del Deo ("The Year of the Yao") are co-directing and co-producing through their Endgame Entertainment. End- game is a production and a co-financing company, with credits including "Hotel Rwanda," "Harold and Kumar Go to White Castle" and "Proof."

"The Year of the Yao" follows NBA star Yao Ming during his rookie year. It will be released this year.

"It's been an absolute extraordinary week," Del Deo said. "I've never been in an environment where people care so much about the voting process. In one of the precincts we've been covering, as of (Tuesday) at 1 p.m., the amount of people voting was a 161% increase over that of 2000."

Endgame doc trails Ohio voters

November 1, 2004

Jim Stern's Endgame Entertainment spent the weekend shooting an untitled documentary focusing on the political battleground of Ohio.

But Stern picked up the docu bug when he made "The Year of Yao," a film about the rookie season of Chinese sensation Yao Ming that has been bought for distribution by Fine Line.

Stern will co-direct the political docu with his "Yao" cohort Adam Del Deo. They planned it as carefully as they could, considering they came up with the idea just a few days ago.

"I was in Chicago, reading an article about how the Republican Party sent 3,600 volunteers in Ohio to challenge voter registrations, and I thought this would be a perfect opportunity to make a movie about the voting process, as crystallized in Ohio," Stern said. "By Monday, we had 10 crews crisscrossing the state, finding compelling story lines from both sides."

Bipartisan cooperation

Despite the late start, Del Deo said both Democrats and Republicans have cooperated with the production. The filmmakers have gone door-to-door with vice presidential candidate John Edwards, filmed California Gov. Arnold Schwarzenegger stumping for President Bush and Bruce Springsteen singing for Sen. John Kerry at Ohio State. They also are trailing undecided voters and closely covering the attempt by Republicans to scrutinize the voting rolls.

"This is the quintessential expression of democracy, and democracy run amok," Stern said.

Stern and Del Deo, who would not disclose their own political affiliations, were unconcerned by questions of whether anyone will care by the time the film is finished and ready to be submitted for next spring's Cannes Film Festival.

Del Deo said the specific and nonpartisan focus of their film will make it relevant regardless of how the election turns out.

"A film about what happened in Florida after the last election would have been relevant long after that election," he said. "This is a serious examination of the most fundamental right we have as Americans. We have to make it entertaining, but we are certain about the relevance of the film's emotional core. And we've taken great pains to get both sides so that it is not dismissed as a partisan tale."

The field of election docus has slimmed somewhat. For instance, a TriStar docu featuring Triumph the Insult Comic Dog bow-wowed out of the race after the Republicans adopted a "no dogs allowed" policy at the Republican National Convention and locked Triumph's creator, Robert Smigel, out of the proceedings.

Walz brought the book to Permut, which in turn took it to Fortress, a company formed earlier this year to finance early film development.

Adapting 'Gospel'

Pustay is adapting "Lamb: The Gospel According to Biff, Christ's Childhood Pal" for Mission Entertainment. He also adapted the bestselling young adult novel "Star Girl" for Nickelodeon and Paramount.

Fortress funded Endgame Entertainment's acquisition of Andy Behrman's "Electroboy," with Tobey Maguire attached to star, and has partnered with Thunder Road Prods. to produce "Bull," based on the true story of three celebrated bull riders.

Permut Presentations' eclectic slate includes "Charlie Bartlett," which Jay Roach is attached to direct at Fox Searchlight; "Brother Sam," based on the life of comedian Sam Kinison, which Tom Shadyac is attached to direct at Universal; and Lions Gate's "Youth Revolt," which Gustin Nash is attached to helm.

No End to Deals at Toronto Fest

September 17, 2004

Although the Toronto International Film Festival has begun to wind down, several deals were announced Thursday: Fine Line inked a pact to pick up world rights to the basketball documentary "The Year of the Yao," a portrait of NBA player Yao Ming, and Palm Pictures took on Johnnie To's "Breaking News."

At press time, further theatrical pacts were being hammered out for the Real to Reel selection "Three of Hearts," the Midnight Madness horror features "Creep" and "Dead Birds" and Susanne Bier's Danish import "Brothers." In other dealings, attorney Andrew Hurwitz and the William Morris Independent unit wrapped up $3 million in international sales on the TIFF pick "Saint Ralph."

Meanwhile, all eyes turned to the high-profile feature "The Libertine," which was slotted for a gala screening Thursday night. The film stars Johnny Depp, Samantha Morton and John Malkovich, and even while many top execs were heading out of town, Miramax Films' Harvey Weinstein was said to be landing in Toronto to screen "Libertine." Besides checking out the film, Weinstein was likely on hand to support Depp, who plays the lead in Miramax's Oscar hopeful "Finding Neverland."

Before their Thursday pickups, Fine Line and Palm had been active at this year's TIFF. Fine Line, which has two films screening in the fest, said this week that it also will release the Spanish-language TIFF selection "Holy Girl" in partnership with HBO Films. Palm grabbed another TIFF title, the Iraq docu "Gunner Palace."

"Yao" — which had its world premiere here — centers on Yao's journey from China and adjustment to the trials of pro basketball in the United States, with his young interpreter, Colin Pine, along for the ride.

The film was co-directed and co-produced for Endgame Entertainment and NBA Entertainment by James Stern and Adam Del Deo. Adam Silver, Gregg Winik and Bill Sanders executive produced, and Larry Weitzman was the film's co-executive producer.

Guy Stodel, senior vp acquisitions and productions, brokered the deal for Fine Line along with the company's Carolyn Blackwood and Sejin Park. The filmmakers were repped by CAA, Stern and Del Deo.

Palm bought North American rights and will roll out the film next year. The company has worked on two To films, "Fulltime Killer" and "PTU."

"Saint Ralph," starring Campbell Scott and Jennifer Tilly, has yet to nab a domestic pact, but the film had sold by Thursday to Japan, the United Kingdom, Germany and France. The film's reps said they are screening "Ralph" next week in Los Angeles for prospective buyers.

Fine Line hoops it up with 'Yao'

September 16, 2004

"Year of the Yao" follows the 7'6" Ming during his first year in the NBA, during which he had to cope with the pressures of being a rookie while knowing he represented the hopes of 1.2 billion people in his homeland. Helping him cope was Ming's interpreter, Colin Pine.

Stern told Daily Variety he originally set out to make a film that followed several NBA players attempting to navigate the challenges of immigration and assimilation, but eventually he and Del Deo focused solely on Ming.

"Even though it's about a sports personality, in some ways it's no more about basketball than 'Spellbound' is about spelling," said Guy Stodel, Fine Line's senior VP of acquisitions and productions. "It's about one man's pursuit of his dream and about the power of sport and friendship to bridge international relations and cultural differences."

Although Fine Line Features has distributed few nonfiction films since the company launched in 1991, the shingle handled the 1994 "Hoop Dreams,"Steve James' doc that follows two inner-city kids who dream of escaping the projects through professional basketball.

Meanwhile, buyers crossed their fingers Thursday night that "The Libertine," which stars Johnny Depp, would prove to have been a good reason to stay until the festival's end. Although the film screened as a work in progress, hopes are high it will prove a hot property.

Millionaire report cards

September 7, 2004

High net-worth individuals usually work in industries where their money does the talking for them. Want to know how successful they are? Just check the bottom line.

The pic biz is an entirely different animal, where "success" is a variable term. For indie production companies, success sometimes means just staying in business. Sometimes it means creating films that people like or that win awards, but doesn't rest solely on box office receipts. The baseline starts with having some work to judge. Few of the millionaires and billionaires who have entered the film industry in the last few years have completed enough films to judge them by, but there are some and we've detailed their progress below. How are they doing? Just check the bottom line.

Jeff Skoll

eBay founder

Company: Participant Films, a finance company funded by Skoll

Key partner: Chris Adams

Evolution: Skoll started with Ovation last year, in partnership with producer Richard Lewis, but it was dissolved early in 2004. He's started the new shingle with a stronger mission to create socially conscious films.

Strategy: Partner on four to six films a year that have a social message that also can be economically viable. The company will invest heavily in outreach, particularly through the Web. "Everyone looks at a dollar return on investment, but we look at a social return on a movie that is equally important," says Adams.

Verdict: Skoll wasn't happy with his first experience in the film business, so he started over quickly. This time, he wants to make sure his message gets out there. "American Gun" should be a good showcase.

Verdict: The first project to screen underperformed, but Endgame will be making a splash at the upcoming Toronto film fest with five films.

Bob Yari

Real estate entrepreneur

Company: Yari Film Group is the umbrella company for several entities financed by Yari, including production shingles Bob Yari Prods., Bull's Eye Entertainment, El Camino Pictures, Stratus Films and foreign sales company Syndicate Films.

Key partners: Neil Sacker for all companies; Cathy Schulman for Bull's Eye; William Morris Independents for El Camino; Mark Gordon for Stratus; David Glasser for Syndicate

Evolution: Yari started in film and directed "Mind Game" in 1989, but left to make his fortune. He returned by forming a partnership with Gordon in 2002 and subsequently assembled his other companies.

Strategy: Fully finance a slate of 12-14 films a year, or do an 80-20 equity split with a major studio, spreading the risk and reward among the different entities. "The reason for the different banners is to have a diversity of management style, taste and function," says Yari.

Verdict: Yari might seem like he's spread a little thin and lacks a cohesive vision, but he's capitalized enough to withstand a few misses (like "Employee of the Month") and survive on a few singles until one of his many films hits it big. With "Crash" and "Haven" among the most-buzzed-about pics lined up for the Toronto film fest, this might be the time.

Completed: Pohlad made several documentaries and features in Minnesota, but none went into major release.

Verdict: It took a while before helmer Terence Malick boarded "Che," but now it should be worth the wait; starting off with an Ang Lee pic isn't a bad way to get rolling.

Fred Smith

Federal Express owner

Company: Alcon Entertainment, indie production company with output deal at Warner Bros.

Key partners: Broderick Johnson, Andrew Kosgrove

Evolution: Johnson and Kosgrove came to Smith to pitch the investment and Smith signed on in 1997. Warner deal made in 2000.

Strategy: Work in the traditional studio contract mold, aiming for a steady stream of hits.

In the works: "Racing Stripes," "The Sisterhood of the Traveling Pants," "The Whole Pemberton Thing" (all with WB)

Verdict: With his output deal, Smith has a traditional and conservative approach to making movies, and a very hands-off management style. So far, "My Dog Skip" and "Insomnia" count as hits, but the rest have been less than stellar.

August 25, 2004

Fortress optioned the life stories of Bobby Delvecchio, an Italian from the Bronx; Charles Sampson, an African American from Watts; and Donnie Gay, an eight-time world champ from Texas. The men are credited with revolutionizing the way professional rodeos attract sponsors.

Female Fans May Not Approve 'Black Book' Star's Behavior

August 2, 2004

"Black Book's" boy: Last week proved to be a tough one for Ryan Seacrest and his crew at "On Air With Ryan Seacrest." The daily variety talk show got the ax from distributor Twentieth Television, and the news broke Wednesday, the same day Ron Livingston stopped by to promote his movie "Little Black Book." "Everything seemed a bit wistful," Livingston said a few hours after leaving the show's Hollywood & Highland headquarters. "(Ryan) got it up for the show, but I could tell it was hard day for all of them." It's just one stop for Livingston on his current tour for the Revolution Studios romantic comedy that finds his character under the microscope of his current girlfriend (Brittany Murphy) about some allegedly secret former girlfriends. It's a part that could find the Iowa native at odds with female fans again after his arc opposite Sarah Jessica Parker on "Sex and the City." (Remember, his character broke up with Carrie Bradshaw using a Post-It note, much to the dismay of the show's diehard fans.) "Both of these parts are guys who have to walk the line a little bit, and it's a tough line to walk," he said. "You need to be someone who believes his own bullshit a little. And in both, I was trying to bring a guy's perspective in what might otherwise be considered a women's show or a chick movie." But it's the latter that has landed him on bus posters and billboards arm in arm with Murphy, whom he calls "tireless." He's had to keep up the energy lately, too, with recent work from "Book" to the indies "Winter Solstice," "American Crude" and the currently lensing "Pretty Persuasion." "I'm trying to shake it up a bit, and I'm getting a chance to," he said.

Camera-ready: "I actually feel like a real person now, well, except for all the cameras." So said Allison Melnick on Friday night during her going-away party at Concorde. Melnick, who has spent years on the front lines of the hottest clubs in both New York and Los Angeles as a "door girl" and all-around nightlife specialist, got to actually step inside the club for a change and host her own toasting of a new career turn from club girl to cable girl. She has left her post with Brent Bolthouse to start a career on the small screen, launching with a reality show for Spike TV that finds her moving to Las Vegas this week and staying for a couple of months. During that time, crews will tail her and world-famous DJ Paul Oakenfold to see what happens when the two take over the not-so-hot club ICE and try to warm it up as the place to be in Sin City. "It's weird to actually be inside for a change," she said to Reporter at Large during a private 40-person dinner (complete with rolling cameras for the show) at the club before the crowds swarmed in to say goodbye. "I can actually talk to my friends." Quality time was spent with those friends, including Lindsay Lohan, Wilmer Valderrama, Randy Jackson, Shane West, Riley Smith, Samaire Armstrong, Dash Mihok, Danny Masterson, Cris Judd, Rick Yune, Jessica Meisels, Jen Goldman and J.C. Chasez. ... Speaking of promoter, producer and nightlife guru Bolthouse, he's adding another entry on his resume, too. Starting today, he launches his weekly radio show "Brent Bolthouse Presents Monday Nights at Indie" for local radio station Indie 103.1. Of the new gig, he says: "I've been a huge supporter and fan of Indie 103.1 since Day One. Music has been such a huge part of the success of my clubs, and I look forward to bringing a new sound to Monday Nights at Indie, playing the music I love and grew up with."

Bring on the burgers: And while Brittany Murphy is busy selling her "Little Black Book," the actress still is not ignoring all the other movies in the marketplace. Well, at least not the hamburgers associated with a certain other film in the marketplace. Murphy is just one of many celebs who stopped by the temporary Sunset Boulevard stand for "Harold & Kumar Go to White Castle" to pick up a free burger from the famous chain. From July 22 through Sunday, New Line and White Castle served up the sandwiches for four hours every night, first doling out one burger per person before porking up to four a head. The demand was strong, according to a New Line rep, with Martin Lawrence, Vivica A. Fox, Carmen Electra, Dave Navarro, Blair Underwood and Ian Ziering cruising by to grab a bite. Rumor has it that a driver swung by right at closing time in a Bentley and offered the management $2,000 to stay open and serve him some free patties. "It's been crazy," the studio spokesperson said of their now-vanished version of the mostly Midwestern chain. "And we see a lot of people running up with, like, an Ohio State T-shirt on wanting to tell their own White Castle story from college. It's a mirage to them out here."

No lie: John Leguizamo is upset. Very upset. And with cornrows, sunglasses and a fly, fitted suit, he looks like somebody not to be messed with. He, however, wants to mess with a disheveled and distraught James Marsden, who at the moment is looking to enter the lobby of a hotel, unaware that Leguizamo is on his trail. The two, of course, are acting, and the alleged hotel is actually downtown's L.A. Center Studios, which is serving as the home for the Summit Entertainment/Endgame Entertainment production "The Alibi." It's Thursday, five days away from wrapping, and everyone is calm, cool and collected even though the filmmakers are prepping for a busy final week with many of the ensemble members converging on set for the some crucial scenes. "This really is the culmination of the whole movie," Summit's Erik Feig says of the day's schedule, which will also find the film's leads, Steve Coogan and Rebecca Romijn-Stamos, stepping in front of cameras at the direction of freshman helmers Kurt Mattila and Matt Checkowski. The pair's claim to fame is their commercial reel and a golden gig working with Steven Spielberg doing visual effects on some crucial sequences for "Minority Report." But now, it's the homestretch for their debut. "Yeah, five days and we're done with this part of the process," Checkowski says. "It's unbelievable. We've been on this movie for a year and a half." Oh, and as for Leguizamo, he's now standing next to a town car, frantically dialing his cell phone, still on Marsden's trail.

Game time: Video game bashes are always big business on the events train, and last week wasn't any different. On Wednesday night, celebs found shelter for their gaming fetish at Shelter in West Hollywood for the launch of "Madden NFL 2005" from Xbox Live and EA Sports. And sharing the spotlight with the popular game franchise was Muhammad Ali, who turned out for the launch, walking down the red carpet and tossing out a few air punches for photographers. Getting their hands on the new game and grabbing glances of the boxing legend were Vince Vaughn, Nicole Richie, Andy Dick, Bill Bellamy, Howie Dorough and Danny Masterson, among others.

Romijn-Stamos On The 'Town'

July 28, 2004

Rebecca Romijn-Stamos, in front of the cameras on the Summit Entertainment/Endgame Entertainment production "Alibi," is in negotiations to be the woman to Ben Affleck's "Man About Town."

The project is being eyed for a late-October start, with Mike Binder directing from his script.

Individual producing credits also are still being worked out, with Media 8 producing and 3 Arts Entertainment likely to receive producing credit as well, according to sources.

"Man About Town" is the story of a top Hollywood talent agent (Affleck) who seems to have it all — success, money and a beautiful wife (Romijn-Stamos). But it all starts to unravel when he finds out that she is cheating on him and his journal has been stolen by a journalist who could expose him.

Steve Coogan and Rebecca Romijn-Stamos star in the pic, which concerns a guy who creates alibis for cheating spouses. Circumstances force him to confront his own criminal past to get a client out of a murder charge.

Rizzotti and Forbes' first onscreen credits will come on the Tobey Maguire film "Electroboy."

The shingle is partnering with David Permut for its second project. Fortress is funding Permut's purchase and development of Elizabeth Swados' novel "Dreamtective." Book tells the story of Cobra Kyte, a girl who discovers she can visit people's dreams and learn their innermost thoughts.

Bankrolling the early optioning and development of the two projects were funds raised from a variety of private investors as well as from Rizzotti and Forbes' venture capital firms, American Film Capital, formed in 2002, and American Film Capital II.

Rizzotti said Fortress will not draw on money from revenue received until investors first receive their ante.

"Electroboy" has become the model for Fortress projects. In that deal Rizzotti and Forbes funded Raw Entertainment and Endgame Entertainment's acquisition of Andy Behrman's autobiographical book as a film project and raised funds for its development.

The companies succeeded in drawing Maguire Entertainment aboard as a vehicle for Maguire.

Through Fortress and American Film Capital, Rizzotti and Forbes are actively developing more than 30 projects, largely through their association with Raw Entertainment.

"Some of the most successful films in movie history have taken years of pitches just to scrape up enough money to hire a writer," Rizzotti said. "A producer coming to us first can retain a higher backend profit participation because the production financier can visualize the film as a whole."

Marsden Will Stick to 'Alibi' for Indie Film

May 19, 2004

James Marsden is set to star in Summit Entertainment and Endgame Entertainment's "Alibi" opposite Rebecca Romijn-Stamos and Steve Coogan.

Shooting starts in July in Los Angeles on the project, with Kurt Mattila and Matt Checkowski making their directorial debuts. The project centers on a guy (Coogan) who runs an alibi service for men and women who cheat on their spouses. One specific client (Marsden) gets into a situation over his head, and Coogan's character must help him fix it. In the process, he relies on and falls for the woman (Romijn-Stamos).

Summit topper Patrick Wachsberger and president of production Erik Feig are producing along with Endgame's Jim Stern. Summit's Bob Hayward and David Garrett also will serve in a producing capacity. Summit and Endgame are financing.

Marsden next stars in "The Notebook" for New Line Cinema. He recently finished filming the Merchant Ivory production "Heights," opposite Glenn Close and Elizabeth Banks. He is repped by Endeavor.

Henson, Lion prime plans for pic pact

April 19, 2004

The Jim Henson Co. has inked a two-year first-look deal with MGM to produce live-action films.

Pact comes after Henson and the Lion co-produced last year's hit family laffer "Good Boy!" Jim Henson Pictures is developing a sequel to the $18 million-budgeted pic, which generated $38 million at the domestic B.O.

Deal makes Henson a major supplier of family-friendly content for MGM, but the pact does not include the Muppets or "Bear in the Big Blue House" characters, which Disney acquired from Henson in February.

"We're incredibly pleased with the way that film ("Good Boy!") was received by audiences of all ages," said Chris McGurk, vice chairman and chief operating officer of MGM. "We look forward to creating more great family entertainment together."

The Moneymen

April 13, 2004

When TV writer-director-producer Paul Haggis was carjacked at gunpoint in the parking lot of a Blockbuster Video on Wilshire Boulevard, he turned the incident into the germ for his feature script "Crash," with the carjackers becoming two of his protagonists.

The film, which he calls an urban drama in the narrative style of 2000's "Traffic," tackles the topic of race relations in Los Angeles. "I wanted to do something that was irreverent, funny, tragic and shocking," the Canada-born Haggis says from the editing bay where his directorial debut is being cut. "When you set out to do something like that, you pretty much know it's not going to be a studio picture."

Haggis encountered resistance from the indie world, too: As he sent out the script he wrote with Bobby Moresco, the message he received time and again was that the topic of race, from a white director, was too risky.

Haggis admits freely that "Crash" could have languished in his bottom drawer had it not been for real estate mogul-turned-movie producer and financier Bob Yari. Yari loved the original perspective and gutsy story line and brought the film to his Bull's Eye Entertainment partner Cathy Schulman.

Before long, production was under way with a star-studded cast that includes Don Cheadle, Sandra Bullock, Brendan Fraser, Thandie Newton, Matt Dillon, Ryan Phillippe and rapper Ludacris.

But Haggis' story is not unique. A couple of years after a spate of wealthy individuals from outside industries — including Yari, Denver-based billionaire Phil Anschutz, Broadcast.com's Mark Cuban and Todd Wagner, the Money Store's Marc Turtletaub, Gateway Computers' Norm Waitt Jr., FedEx's Fred Smith and financier Jim Stern — set up production shingles in Hollywood, their slates are in full swing, and the effect of their presence is being felt throughout the independent film business. Whether they be agents, producers or talent professionals, industry veterans are calling these moneymen a godsend.

"They are making a substantial impact on the business," says Mark Gill, who headed Yari's Stratus Film Co. before taking over Warner Independent Pictures. "What I see happening is these guys stepping in to provide the last 20%-30% of the financing and then the wraparound financing that pulls it all together. That's the difference between a movie living or dying."

It's not only for a feature here or there: The amount of production these financiers has set in motion is significant. Through Crusader Entertainment and Walden Media, Anschutz has greenlighted three $100 million-plus movies: the upcoming releases "Around the World in 80 Days" (Buena Vista), "Sahara" (Paramount) and "The Chronicles of Narnia: The Lion, the Witch and the Wardrobe" (Buena Vista). About a dozen more films are in production or development at those two companies, with budgets ranging from $20 million-$100 million.

While Yari generally is working on smaller projects (with budgets in the $5 million- $50 million range), he is responsible for more than $100 million worth of production in the pipeline through his four companies: Stratus, Bull's Eye, El Camino Pictures and Bob Yari Prods.

Beyond investing in a few films, some members of this financier group are putting money into long-term infrastructure, an indication that they hope to ride out any early setbacks. Yari plans to create an indie studio that, within two years, will house a video arm and a platform for theatrical releasing. He also recently acquired a majority stake in foreign-sales company Syndicate Films, which will represent most of Yari's product overseas.

Cuban and Wagner, who made billions during the tech boom, have bolstered their 2929 Entertainment by acquiring the Landmark Theatres chain, Magnolia Pictures Distribution and Rysher Entertainment's television library. They also own production company HDNet Films and cable channel HDNet, essentially making 2929 a vertically integrated company with the means to develop, produce, distribute and broadcast content. They are set to release first theatrical feature, "Godsend," this month through Lions Gate.

While the flurry of activity has captured the industry's attention, the impact of these players perhaps owes more to timing than to the details of the deals themselves. "The foreign sales market is off by 20%-30%, German tax funds are a shadow of their former selves, and the U.K. market just got cut in half five weeks ago," Gill says.

Also, other investors and the Japanese companies that were prevalent during the 1990s have disappeared. Collectively, that translates to billions of dollars that have left the film-financing pool during recent years. Amid that climate, a Yari or an Anschutz can move ahead quickly, attracting underemployed top talent and veteran insiders in the process. "These guys are spending money when relatively few people are," Gill says.

Adds Stern, who felt the economic climate was right to set up his Endgame Entertainment: "The dissolution of European markets created more cash needs in Hollywood. There were great opportunities to raise money and to take advantage of inefficiencies in the market."

Stern's current projects include Miramax's "Proof" and the Tobey Maguire starrer "Electroboy."

Some of these wealthy individuals already have achieved movie success. Waitt, who set up Gold Circle Films, struck gold with a 50% equity investment in 2002's "My Big Fat Greek Wedding." Smith has been around a few years longer with Alcon Entertainment and has seen profit with 2000's "Dude, Where's My Car?" and 2002's "Insomnia."

But finance pros are quick to note that the investments of a few billionaires don't come close to offsetting losses sustained by the industry. "The studios are really hungry to find people who want to invest in their movies," says Adam Platnick, head of Freestyle Pictures and a veteran of raising capital for Hollywood film companies. "There's no other international company that's replacing the group that was co-financing big-budget movies. Companies like Canal Plus, PolyGram and Helkon have all stopped or gotten out of the business; there are only a couple players left, like Village Roadshow, that can afford to co-finance (a film on the scale of 1999's) 'The Matrix.'"

Among the billionaire investors, only Anschutz has greenlighted a picture on a blockbuster scale — but he is not aiming to fill the passive role with the studios that international companies did in the past. This new group looks to the studios more as marketing and distribution partners, rather than financing partners.

In fact, as the majors respond to the economic downturn by contracting their slates and focusing on surefire franchises, many of the upstart players see an opening to create studio-quality fare at a reduced price. "There definitely is a target niche that is undersupplied," Yari says, citing a mature foreign market that is willing to pay more for fewer star-driven vehicles than for a raft of no-name indies or studio bombs. "We look for projects that work internationally in as many territories as possible; we either presale or vet the valuations in the international markets before we start a film."

Perhaps because of their outsider status, these wealthy individuals also tend to bring unconventional approaches to their business deals — and that, in turn, has created new opportunities in the marketplace.

Anschutz, for example, was able to move forward on "80 Days" after U.S. distributor Paramount pulled out before filming began. At $110 million, the movie was one of the most expensive films ever to go into production without distribution. Such circumstances might have crippled another project, but because of his deep pockets and trust in the material, Anschutz was able to bet on finding a distributor when the film was completed. (Buena Vista is set to release the action-adventure in June.)

Stern brought his hedge-fund background to his Hollywood endeavors, and instead of creating a production company, he set up Endgame as a discretionary fund with several other equity investors. "There is a certain investment time frame that's built in; we're not a company — we have to return capital at a certain point," he says. But because of that structure, Stern has the luxury of picking and choosing projects without an obligation to make a slate of films in order to be profitable.

His moves are being studied as other producers seek new sources of capital to launch their projects. Surprisingly, there is a fair amount of interest from Wall Street investors in such a structure. "There's not a lot of alternatives out there right now," Relativity Management founder and former venture capitalist Ryan Kavanaugh says. "You have a very fickle stock market, a venture market that is scary to Wall Street, an inflated real estate market and a very low interest rate in the bond market. Suddenly, the movie industry doesn't look so bad." Kavanaugh is doing his part to facilitate the relationship between the two worlds: He brokered a deal between veteran Wall Street investor Mark Kimsey's Daedalus Fund and producer and former studio head Mark Canton in Canton's new entity, Atmosphere.

Yari's El Camino Pictures arrangement with William Morris Independent also was an unconventional move that took observers by surprise. Films are packaged by WMI heads Rena Ronson and Cassian Elwes, with Yari as the company's owner and primary investor. Yari puts up the first piece of equity for a project, and the rest of the budget comes from tax incentives, presales and gap financing. Ronson says the setup has changed radically the way she can approach material.

"By putting up an initial cash pay-or-play commitment, he makes it possible for a first-time director to get a shot at landing the actors of their choice," she says. That essentially solves the "cart and horse" problem faced by most indie producers, who struggle to find a financier who will commit without a star or a star who will commit without financing. Yari has given a significant leg up to emerging filmmakers: Seven of his 12 films are by first-time directors.

But all of this new money doesn't enter the market without strings attached. In the case of Anschutz, a practicing evangelical Presbyterian, the investor has been open about looking for family-friendly projects that square with his ideology. While his commitment to making clean, uplifting G- and PG-rated films might sound out of step with Hollywood, Anschutz is betting that a void exists for fare that appeals across generations. "We wanted to make films that you would not be embarrassed to bring your mother to or your kids to," says Howard Baldwin, former president and CEO of Crusader, who left the company recently to form production outfit Baldwin Entertainment Group with his wife Karen.

Warns Gill, "The bad news is, not all of these guys will last." In the movie business, not all apparent success stories have happy endings, either. Bob Sturm, who co-financed Fox Searchlight's "One Hour Photo" through his Catch 23 Entertainment, saw a return when the film grossed $44 million at the boxoffice. But after an initial quick rise that included hiring former Artisan executive Jeremy Barber and making a bevy of slate and business announcements, Sturm got cold feet and decided to retrench on his investments and scale back the operation.

With such a clear loss of momentum, the future of Catch 23 appears to be in question. One former employee says that at the root of the firm's problem was a lack of understanding between outsiders and insiders regarding running a business in Hollywood. It's not an unfamiliar story, and perhaps it's more surprising when an outsider does have the wherewithal to survive.

For Haggis, it only took one investor with chutzpah to make a dream project a reality — and the way he sees it, the longer a guy like Yari can stick around, the better it is for the business. "There are very few producers today who will take the risk," Haggis says.

Endgame's got Cajun persuasion

March 25, 2004

The state of Louisiana has made an equity investment in Jim Stern's production and financing shingle Endgame Entertainment.

Under the arrangement, Endgame will shoot a number of pictures in the state, the first of which will be the adaptation of Max Brooks' "The Zombie Survival Guide." Brooks will make his directorial bow on the project, which he's adapting from his own novel.

Published last year by Random House imprint Three Rivers Press, "The Zombie Survival Guide: Complete Protection From the Living Dead" is a tongue-in-cheek advice book on how to avoid being killed and eaten.

Looking beyond zombies, Endgame plans to use the Louisiana alliance to identify potential projects and to promote the Louisiana Motion Picture Incentive Program, which provides producers with sales tax exemptions as well as employment and investor tax credits.

As an equity investor, the state of Louisiana will also have financial participation in all Endgame projects.

These include "Proof," with Miramax Films; "Five Children and It," \with the Henson Co. and the U.K.'s Capitol Films; "Compleat Female Stage Beauty," with Tribeca Pictures and Lions Gate Entertainment; "Harold & Kumar Go to White Castle," with Senator Intl. and New Line Cinema; and "Electroboy," with Raw Entertainment and Toby Maguire's Maguire Entertainment.

Louisiana will look to Endgame to attract quality film projects as well as act as financing and production adviser. Endgame finances a wide variety of entertainment opportunities, including development, co-production financing and acquisitions.

"This partnership is unique in the country," said Lonny Kaufman, entertainment cluster director for the state of Louisiana. "It represents an opportunity for the state to further develop our infrastructure in the entertainment industry by creating a direct link to an important ingredient, capital."

Stern is a two-time Tony-winning producer for "The Producers" and "Hairspray." Stern also directed "Michael Jordan to the Max" and "It's the Rage," starring Gary Sinise, Joan Allen and Jeff Daniels.

Here's the equation being evaluated at the American Film Market: Most film sales contracts are denominated in U.S. dollars, even for non-U.S. film sellers. As the dollar declines in value, buyers in strong-currency territories need fewer of their own euros, yen or pounds to convert into the dollars that pay their film acquisition contracts.

"It's good for American sales companies, but there's more to it," says Rick Sands, chief operating officer of Miramax Films.

Film buyers still pay their local consumer marketing expenses in local currencies.

In some cases, though, buyers have dollar-based contracts to sell films to local TV outlets, thus yielding a further currency benefit to a film buyer.

Point of negotiation

"It's a point of negotiation, much like anything else," notes Howard Kaplan, Morgan Creek Intl. chief operating officer, who is also vice chairman of finance for the American Film Marketing Assn.

For the film biz, the weak dollar has a negative side in instances where U.S.-based companies are funding production overseas in strong-currency territories.

A more typical scenario is that production money is coming from multiple sources that could be a blend of weak dollars and other currencies that are strong.

"You'd think in the long run it would have a favorable impact, but in the near term the impact has been difficult," Hansen points out.

Libraries less risky

Sales companies with sizeable film library titles -- older movies produced at least two years ago -- have less proportional exposure in potentially currency-risky new production.

To insulate against currency gyrations, production funding is sometimes backed up with future foreign currency contracts designed to neutralize exchange rate changes.

Indie finance execs say such hedging maneuvers work in production but not film sales. Productions have fixed start dates and thus predictable timetables for currency needs. Film sales are a patchwork and unpredictable, making it difficult to precisely schedule when currency draw-downs would need to occur in the future.

For two years, the dollar has ratcheted down, a result of relatively low U.S. interest rates and a ballooning federal budget deficit.

Two years ago, it took 1.15 euros to match a dollar. Last year at this time, the exchange rate required just 0.93 euros and now it's just 0.80.

Powerful pound

The story is the same for the U.K.'s pound sterling. The exchange rate in British currency went from 71 pence to the dollar two years ago to 54 pence these days.

The dollar's decline is dramatic, though the film industry didn't get too excited at first.

One reason is that film sales deals typically require 80% of payment upon delivery of a finished film, which for a new production would be about a year into the future, when the currency rate will be different.

But impact is immediate for the 20% down payment and nearly immediate for acquisitions of finished films when the 80% final payment is perhaps only a month off.

Short-term approach

Another reason for the blase attitude is that film buyers and sellers tend to manage their businesses on a day-to-day basis, simply looking at money coming in and money going out, without great regard for broader economic trends.

"You would certainly think now is the time for buyers to make any payments that they're late on, and everybody pays late," notes Lewis Horwitz, president of movie banker the Lewis Horwitz Organization and head of AFMA's affiliated financial members.

"We haven't noticed any big change in payments. Now is certainly time to make any payments that are late."

Weakening the euro

The euro currency zone may undergo its own weakening in the future as the European central bank is pondering whether to lower its relatively high interest rates to promote economic growth. Western Europe accounts for 62% of international indie film sales (international excludes the U.S.)

One thing's for sure: The weak dollar now has film sellers sharpening their pencils to recalculate their pricing models for films sales going forward.

"Sellers will re-evaluate and, where it makes sense, pricing will increase," says Sands. "The full benefit of the weak dollar can't be taken totally by the territorial buyer. It's not fair. Some of that benefit needs to be shared."